“Dreams without goals remain dreams and will ultimately fuel disappointment. Goals on the road to achievement cannot be achieved without discipline and consistency”

Denzel Washington

Hello Traders,

Okay, people, January is coming to an end here rather quickly and I have one simple question:

How are the 2022 goals coming along? Are you on pace, a little bit ahead or behind on your goals, or have you already thrown in the towel?

The idea of goal setting is good when you are planning it in your head, yet something shifts when it comes to the practical aspect of it. Why is it so easy to visualize yet challenging to execute? I think that oftentimes we don’t set proper expectations when we set our goals. Let’s say for example you have a goal to lose a certain number of pounds. Let’s say 15. It doesn’t appear to be a big unrealistic number, but we don’t set the time frame in which we expect to lose said 15 pounds. If we’d instead set monthly expectations of perhaps 5 pounds a month, it takes away the focus of 15 down to 5 and now that looks like a much more attainable number.

The same is true when it comes to trading. I have had the pleasure of chatting with several students that want to achieve various trading goals like learning a new strategy, attaining a certain cash flow amount, owning a certain amount of shares of a company, journaling, and more. To achieve the goals we set to succeed in trading, we need to set proper expectations and have a proper mindset. By year five of my trading life, one of my goals was to manage a hedge fund. Well, I’m in year seven and that has yet to happen. At the time, I don’t even know whether I fully understood what it would require to manage a Hedge Fund. The idea sounded pretty cool, so I threw it out to the universe! I have since learned it’s hard enough to manage my accounts and until I can get a handle on managing my own, there’s no way I’m putting the responsibility of managing other people’s money on my shoulders.

If you have a goal for example to be a better long-term investor, then your mindset needs to be focused more on the fundamentals of the company followed by technical analysis. Whereas if you are short-term trading, fundamentals don’t matter as much as technical. In addition, you also need to be able to ride the roller coaster said investment might take you on over the months/years you intend to hold it for.

Now for cash flow or ROI expectations. Does this long-term asset pay a dividend? Are you planning on selling calls for cash flow? If your ROI goals are to attain a 5% monthly ROI yet the stock is cash flows on average 2% you don’t have proper expectations. Your intention needs to match your expectation. A covered call strategy naturally will have a lower ROI compared to other cash flow strategies because it requires you to purchase the asset. You can easily expect a 5%+ ROI on credit spreads and naked puts so if those are the returns to are aiming for don’t expect to consistently hit them with Covered Calls as your only strategy.

Ladies join me tonight at 8:30 PM EST as we discuss setting proper expectations and goal setting.

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